Apple has asked many of its suppliers to lower their rates, in an attempt to retain its gross profit margins despite a slowdown in iPhone sales. The company is also exploring other suppliers to help save money.
Taiwanese component manufacturers including Largan, Foxconn and Pegatron “have already been affected,” according to a report on DigiTimes, and the whole thing is causing a race to the bottom between suppliers as they fight to win Apple’s business. Japan-based suppliers look set to suffer the most, “since their quotes are usually higher,” while those based in China and Taiwan battle it out to offer quality and quality at the lowest price.
One positive for consumers is that this new-found harsh competition is encouraging Taiwan’s big IT companies to work on “improving their technologies, yield rates and product quality” to help stand out from competing suppliers. Better, more reliable iPhones? Yes please.
It doesn’t seem entirely fair to force the suppliers to take the financial hit when iPhone sales slow, rather than Apple itself – but then again, a little competition can be healthy to maintain standards. Hopefully Apple will stick with those companies who can offer high quality products and not prioritize cost too much. As the most profitable company in the world, it should be able to afford it, right?